Adjusting the Accounts 3-21 131. A gift shop signs a three-month note payable to help finance increases in inventory for the Christmas shopping season. The note is signed on November 1 in the amount of $50,000 with annual interest of 12%. What is the adjusting entry to be made on December 31 for the interest expense accrued to that date, if no entries have been made previously for the interest? a. Interest Expense 1,000 Interest Payable.. 1,000 b. Interest Expense 1,500 Interest Payable. 1,500 c. Interest Expense 1,000 Cash 1,000 d. Interest Expense 1,000 Note Payable 1,000